The Church of Jesus Christ of Latter-day Saints Accused by SEC
The Securities and Exchange Commission today charged Ensign Peak Advisers Inc., a non-profit entity managed by The Church of Jesus Christ of Latter-day Saints, with failing to file forms that would have disclosed the Church’s equity investments and instead filing forms for shell companies that obscured the Church’s portfolio and misrepresented Ensign Peak’s control over the Church’s investment decisions.
The SEC also charged the The Church of Jesus Christ of Latter-day Saints with committing these violations. Ensign Peak agreed to pay a $4 million penalty and the Church agreed to pay a $1 million penalty to settle the charges.
According to the SEC’s order, Ensign Peak failed to file Forms 13F, the forms on which investment managers are required to disclose the value of certain securities they manage, from 1997 to 2019. The The Church of Jesus Christ of Latter-day Saints was concerned that disclosing its portfolio, which had grown to approximately $32 billion by 2018, would have negative consequences, according to the order.
To conceal the size of the The Church of Jesus Christ of Latter-day Saints’s portfolio, Ensign Peak formed thirteen shell LLCs, ostensibly with locations across the United States, and filed Forms 13F in the names of these LLCs rather than in Ensign Peak’s name. According to the order, Ensign Peak had investment discretion over all relevant securities, controlled the shell companies, and directed nominee “business managers,” the majority of whom were employed by the Church, to sign the Commission filings.
The shell LLCs’ Forms 13F, for example, stated incorrectly that the LLCs had sole investment and voting discretion over the securities. The SEC’s order concludes that Ensign Peak retained control over all investment and voting decisions.
We allege that, with the Church’s knowledge, the LDS Church’s investment manager went to great lengths to avoid disclosing the Church’s investments, depriving the Commission and the investing public of accurate market information,” said Gurbir S. Grewal, Director of the Securities and Exchange Commission’s Division of Enforcement. All institutional investment managers, including non-profit and charitable organizations, are required to file timely and accurate information on Forms 13F.
Ensign Peak agreed to settle the SEC’s charges that it failed to file Forms 13F and misrepresented information on these forms, in violation of Section 13(f) of the Securities Exchange Act of 1934 and Rule 13f-1 thereunder. The Church of Jesus Christ of Latter-day Saints agreed to settle the SEC’s claim that it caused Ensign Peak’s violations by knowing about and approving Ensign Peak’s use of shell LLCs.
The SEC’s investigation was led by Paul Feindt, who was overseen by Tracy Combs and Tanya Beard of the Salt Lake Regional Office and Laura Metcalfe of the Denver Regional Office.
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